Five reasons to keep paying into a pension plan

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Pension plans are designed with the long term in mind and could help you achieve the retirement you want. We know people might be feeling pressure on their wallets over the festive season. But here are five reasons why continuing to pay into a pension plan now – if you can – could really pay off in the future.

1. Your employer usually pays in as well

Employers usually need to set up a pension plan for you when you start working for them. This is called auto-enrolment. Normally, at least 8% of your ‘qualifying earnings’ must be paid into the plan in total. A minimum of 5% usually needs to come from you and 3% from your employer. Some employers pay in more than their minimum and others might match what you put in up to a particular percentage. You can ask them to see what’s possible.

2. You can get a hand from the government

When you pay into a pension plan, you’ll usually get tax benefits; a helping hand from the government while you save for your future.

You can get tax benefits in different ways. You might find your provider claims back some tax you’ve already paid and adds it to your plan as ‘tax relief’. So think of it like a top-up. 

Or you might find that your payments into a plan are taken from your before-tax pay, effectively lowering the amount of Income Tax and National Insurance you pay.

Find out more about tax benefits, including when you might need to claim money back yourself, on MoneyHelper.

3. You could see growth on top of growth

Money paid into a pension plan is invested, meaning it has the potential to achieve investment growth over the long term. Thanks to something called compounding, you could see growth on top of growth – so it could be like a snowball effect. Just remember, the value of investments can go down as well as up and could be worth less than was paid in.

So paying into a pension plan consistently, and staying invested for as long as you can, could help you make the most of the power of compounding. And that could make a really positive difference to the amount you retire with. 

4. A pension plan could help you reach the lifestyle you want in future

To find out what your costs might look like at a ‘minimum’, ‘moderate’ or ‘comfortable’ standard of living in retirement, see the Retirement Living Standards by Pensions UK.

You can then check how much money you might be on track for by using our pension calculator. You can also edit the values in the calculator to explore how changes to payments could impact the amount you retire with. 

Continuing to pay into a plan now could help you afford the things you want in retirement – like hobbies, for example, or holidays.

5. The State Pension might not be enough

The State Pension could be a huge help to you in retirement, but it won’t necessarily be enough to cover all your expenses. 

Currently, the full new State Pension is £11,973 a year. But a minimum standard of living in retirement could cost £13,400 for a single person, according to the Retirement Living Standards. 

But paying into a pension plan can help you bridge that gap and get you closer to the lifestyle you want. 

Overall...

Overall, paying into a pension plan comes with lots of benefits. So continuing to pay into one, if you can, is something you might thank yourself for in future.

Do be aware of the annual allowance. This is the total amount that can be paid in across your pension plans in a tax year before you could face a tax charge. You can visit MoneyHelper to find out more about it. Your allowance might be lower in some circumstances – for example, if you’ve started taking taxable money (i.e. more than your tax-free allowance) from a plan.

You can usually check how much you’re paying into a pension plan on your provider’s app or online services. Or you could get in touch with them. You can find out more about Standard Life’s online services on our website, or see our support page for FAQs and ways to get in touch with us. 

If you’re considering changing your payments into a plan (perhaps increasing them, if that’s right for you), you can usually also do this through your provider’s online services or app, or by contacting them. If your employer set up your plan and you want to change your monthly payments, ask them how it works for you. 

 

The information here is based on our understanding in November 2025 and should not be taken as financial advice.

A pension is a long-term investment that you cannot normally access until age 55 (rising to 57 from 6 April 2028). Its value can go down as well as up and could be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.